Same-store sales jump in first week of January

NEW YORK -Getting 2001 off to a strong start, after a weak finish to the old year, retail same-store sales surged by 3.9 percent in the first week of January, running well ahead of the prior week and easily beating a target of 2.3 percent, according to the widely watched Redbook Average.

Picking up steam after a lackluster, promotional Christmas season, "sales were on to ahead of plan for most companies in our model in the first week of January, an improvement from December's weak close," said Redbook analyst John Pitt.

"Stores in the Northeast saw customer traffic snap back after having been depressed by snowstorms the previous week," he said. "Additionally, discount stores were helped by a soft comparison with the year-ago week, when shoppers stayed away after having overstocked pantries the previous week in anticipation of Y2K disruptions. Retailers noted too that consumers were motivated by price as January clearance sales got under way and stores posted markdowns to move seasonal inventories."

That was the good news, said Pitt. Then dropping the other shoe, he added, "These boosters should work themselves out of the system relatively quickly. It is not untypical for January to start strong and wind down as price-driven demand wears out and clearance stocks run low. Consequently, we expect to see sales growth revert towards plan over the course of the month."

Pointing out an anomaly in the retail calendar, Pitt noted, "January is a five-week month instead of the usual four weeks to allow the 4-5-4 retail calendar to recalibrate, as occurs every several years. For the same-store sales comparisons, retailers usually compare the first four weeks of the month with the equivalent year-ago period, and treat the final week as a separate entity. Typically, this final week is not carried forward, since it would cascade the slippage through the entire year. However, not all retailers treat the calendar shift like this, and investors should expect some lack of uniformity-and therefore possible confusion-in the way monthly same-store sales releases are presented during the 2001 fiscal year, beginning in February."

Breaking out retail sales by format, broadlines retailers, including chains and department stores, did best against their targets, according to Redbook, with a 1.8 percent increase vs. a 0.7 percent plan. Discounters did less well, with a 4.9 percent increase outpointing a 4.4 percent target.